ASSET PURCHASE AGREEMENT

 

                                                                     Exhibit 2.1

 

                            ASSET PURCHASE AGREEMENT

 

 

         This ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered

into as of 12:01 a.m. on December 2, 2004 (the "Effective Time"), by and between

SPEEDEMISSIONS, INC., a Georgia corporation maintaining an address at 1029

Peachtree Parkway North, Suite 310, Peachtree City, Georgia 30269 (the

"Purchaser"),and SIT'S EMI MOBILE TESTING UNIT a company organized and existing

under the laws of the State of Iexas, maintaining business offices, 5433

Westheimer Road, Houston, Texas, ("Seller") and Debra Price(the "Shareholder")

(hereinafter the Seller and the Shareholder are sometimes referred to,

individually as a "Seller Party" and collectively as the "Seller Parties").

 

 

 

                             BACKGROUND INFORMATION

 

         Seller is in the business of providing mobile vehicle emissions testing

services (the "Business"), and the Shareholder is the owner of all of the

capital stock in Seller. This Agreement sets forth the terms and conditions upon

which Purchaser is acquiring from Seller, and Seller is selling and delivering

to Purchaser, those assets used by Seller in the operation of the Business.

 

 

                               OPERATIVE PROVISIONS

 

         In consideration of the mutual covenants and conditions hereinafter set

forth, and other good and valuable consideration, the receipt and sufficiency of

which are hereby acknowledged, Seller, the Shareholder and Purchaser hereby

mutually agree as follows:

 

1. SALE AND TRANSFER OF ASSETS; CLOSING.

 

         1.1. Assets. Upon the terms and subject to the conditions set forth in

this Agreement, at the Closing (hereinafter defined), Seller shall sell, convey,

assign, transfer and deliver to Purchaser, and Purchaser shall purchase and

acquire from Seller, all of Sellers' right, title, and interest in and to

certain of Seller's property and assets, real, personal or mixed, tangible and

intangible, of every kind and description, wherever located as specifically set

forth on Exhibit A (the "Assets"), but excluding the Excluded Assets

(hereinafter defined). Notwithstanding anything herein to the contrary, the

transfer of the Assets pursuant to this Agreement shall not include the

assumption of any Liability (hereinafter defined) related to the Assets,

Business or operations of Seller except as expressly provided herein.

 

         1.2. Excluded Assets. Notwithstanding anything to the contrary

contained in Section 1.1 or elsewhere in this Agreement, the following assets of

Seller (collectively, the "Excluded Assets") are not part of the sale and

purchase contemplated hereunder, are excluded from the Assets and shall remain

the property of Seller after the Effective Time.

 

                  1.2.1 all minute books, stock records and corporate seals;

 

 

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                  1.2.2 any equity securities of Seller held in treasury;

 

                  1.2.3 all personnel records and other records that Seller is

         required by law to retain in its possession;

 

                  1.2.4 all rights in connection with and assets of any employee

         benefit plans maintained by Seller;

 

                  1.2.5 cash and bank deposits of Seller as of the Effective

         Time;

 

                  1.2.6 all rights of Seller under this Agreement; and

 

                  1.2.7 all assets, if any, specifically set forth on Schedule

         1.2.

 

         1.3. Consideration. The consideration for the Assets (the "Purchase

Price") will be Thirty-six Thousand Dollars ($36,000.00) to be paid by Purchaser

to Seller after Closing via an earn-out schedule of $1,000.00 per month for a

period of thirty-six (36) months.

 

         1.4. Liabilities. At the Closing, Purchaser shall assume and agree to

discharge only the obligations of Seller arising after the Effective Time under

the Premises Lease, as hereinafter defined (the "Assumed Liabilities"). Except

for the Assumed Liabilities, Purchaser shall not assume any Liabilities of

Seller or the Shareholder; and Seller shall pay, perform and discharge all of

such Liabilities in accordance with their terms. For purposes of this Agreement,

the term "Liabilities" means any existing or future liability, obligation, debt,

account payable, lease obligation, contract, agreement, duty or commitment of

Seller or Shareholder of any kind, character or description, whether known or

unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed,

liquidated or unliquidated, secured or unsecured, joint or several, due or to

become due, vested or unvested, executory, determined, determinable or

otherwise, and whether or not the same is required to be accrued on the

financial statements of Seller or the Shareholder.

 

         1.5. Allocation. Seller and Purchaser agree that the allocation (the

"Purchase Price Allocation") of the Purchase Price among the Assets shall be as

set forth on Schedule 1.5.

 

         1.6. Closing. The closing (the "Closing") of the transactions

contemplated by this Agreement (the "Contemplated Transactions") shall take

place contemporaneously with the execution of this Agreement in the offices of

Cohen Pollock Merlin Axelrod and Small, P.C. 3350 Riverwood Parkway, Suite 1600,

Atlanta, Georgia 30339 ("CPMAS"), attorneys for Purchaser. At the Closing the

parties shall deliver the following documents:

 

              1.6.1 Selling Parties' Deliveries at the Closing. Seller and the

Shareholder shall deliver to Purchaser at the Closing the following items:

 

                  (i)       a Bill of Sale from Seller to Purchaser in form and

                           substance acceptable to Purchaser;

 

 

 

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                  (ii)      a copy of the resolutions duly adopted by Seller's

                            Board of Director and Shareholder authorizing the

                           execution, delivery, and performance of this

                           Agreement and the consummation of the Contemplated

                           Transactions, certified by an officer of Seller;

 

                  (iii)     unaudited financial statements and Georgia Clean Air

                           Force management reports for each monthly financial

                           period subsequent to April 30, 2004 and prior to the

                           Effective Time;

 

                  (iv)      titles to all motor vehicles being transferred to

                           Purchaser hereunder, endorsed for assignment;

 

                  (v)       evidence that any and all security interests covering

                           the Assets have been released by Seller's lender; and

 

                  (vi)      all other documents or instruments required by this

                           Agreement or reasonably required by Purchaser's

                           counsel to consummate the Contemplated Transactions.

 

              1.6.2 Purchaser's Deliveries at the Closing. Purchaser shall

deliver to Seller at the Closing, the following items:

 

                  (i)        a copy of the resolutions duly adopted by the Board

                           of Directors of Purchaser authorizing the execution,

                           delivery, and performance of this Agreement and the

                           consummation of the Contemplated Transactions,

                           certified by an officer of Purchaser; and

 

                  (ii)      all other documents or instruments required by this

                           Agreement or reasonably required by Purchaser's

                           counsel to consummate the Contemplated Transactions.

 

2. REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES. The Seller Parties,

jointly and severally, represent and warrant to Purchaser as follows, which

representations and warranties shall survive the consummation of the

Contemplated Transactions:

 

         2.1. Organization; Power; Authority. Seller is a corporation duly

organized, validly existing, and in good standing under the laws of the State of

Georgia, with full power and authority to carry on the Business as now being

conducted and to own, operate and lease (as the case may be) the Assets and to

perform all of its obligations. Seller has the corporate power and authority to

sell, assign, transfer, convey and deliver to Purchaser the Assets as

contemplated by this Agreement, and the execution, delivery and performance of

this Agreement and the Contemplated Transactions have been properly and duly

authorized by Seller. Shareholder has the authority to enter into this Agreement

and consummate the Contemplated Transactions. This Agreement and all other

agreements executed in connection with the Contemplated Transactions constitute,

or will constitute upon execution, the legal, valid and binding obligations of

Seller and Shareholder, enforceable in accordance with their respective terms.

 

 

 

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         2.2. No Conflict or Violation; Approvals. The execution, delivery and

performance of this Agreement and the Contemplated Transactions will not (a)

violate or conflict with Seller's articles of incorporation or by-laws; (b)

cause a breach of, or a default under, or create any right for any party to

accelerate, terminate, modify or require notice under or cancel, any contract,

permit, authorization or concession that Seller or the Shareholder is a party or

by which any of the Assets are bound; (c) violate by Seller or Shareholder any

law, rule, regulation, constitution, injunction, judgment, order, decree, ruling

or other restriction of any government, government agency or court; or (d)

impose any encumbrance, restriction or charge on the Business or on any of the

Assets. No consent, approval or authorization of, or declaration, filing or

registration with, any authority, or any other person or entity, is required to

be made or obtained by Seller or Shareholder in connection with the execution,

delivery and performance of the Agreement and the Contemplated Transactions,

except as have been received by Seller or Shareholder prior to the Closing.

 

         2.3. Capitalization. The Shareholder owns 100% of the outstanding

capital stock of Seller free and clear of all encumbrances. No other person has

a contract right, whether by issuance, sale, transfer, or otherwise to any

capital stock of Seller. Seller has no subsidiaries.

 

         2.4. Financial Statements. Seller has delivered to the Purchaser

complete and correct copies of unaudited financial statements of Seller for the

period ended as of July 31, 2004 (the "Financial Statements"). The Financial

Statements were prepared in accordance with GAAP consistently applied throughout

the periods indicated; are consistent with the books and records of the

Business; and present fairly the financial condition and results of operations

of the Business as of the date thereof and the period then ended. There has not

been any change in the assets, liabilities, financial condition or operations of

Seller from that reflected in the Financial Statement for the period ending July

31, 2004 (the "Current Financial Statement"), except changes in the ordinary

course of business that have not been, individually or in the aggregate,

materially adverse. Except to the extent reflected or reserved against or noted

in the Current Financial Statement, Seller had, as of the date thereof, no

material liabilities or obligations of any nature, whether accrued, absolute,

contingent or otherwise, including without limitation tax liabilities, whether

incurred in respect to or measured by Seller's income for any period prior to

the date of such Current Financial Statement, or arising out of transactions

entered into, or any set of facts existing prior thereto. There exists no basis

for the assertion against Seller or the Business as of the date hereof or as of

the date of the Current Financial Statement, of any material liability of any

nature or in any amount not fully reflected or reserved against or noted in the

Current Financial Statement.

 

         2.5. Title. Seller has good and marketable title to all of the Assets,

free and clear of all liens, assignments, security interests, claims, mortgages,

encumbrances or charges of any kind or nature ("Liens"). As of the Effective

Time, Purchaser shall acquire good and marketable title to all of the Assets

free and clear of all Liens. The Assets constitute all of the assets (tangible

and intangible, and including, but not limited to, all intellectual property

assets) necessary to operate the Business in the manner presently operated by

Sellers and each of the Assets and the Premises is in good operating condition

and repair, normal wear and tear excepted. Without limitation the Assets include

all of Seller's right, title, and interest in and to the following (in each case

except for the Excluded Assets), wherever located:

 

 

 

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              2.5.1 All of Seller's motor vehicles and emissions testing

equipment (collectively, the "Equipment"), including, without limitation, the

Equipment disclosed in Schedule 2.5.1.

 

              2.5.2 All inventories of Seller and all goods and supplies, in

each case to the extent used directly or indirectly in or otherwise relating

primarily to the Business (the "Inventory"). All items included in the Inventory

consist of a quality and quantity usable and, with respect to finished goods,

saleable, in the ordinary course of business of Seller except for obsolete items

and items of below-standard quality, all of which have been written off or

written down to net realizable value in the Financial Statements, as the case

may be.

 

              2.5.3 All goodwill, customer lists, trade names, trademarks,

service marks, logos, patents, copyrights, know-how, inventions and telephone

number, relating to or used in connection with the conduct of the Business.

 

               2.5.4 All contracts, agreements, licenses, commitments,

arrangements, and permissions, whether written or oral, entered into in

connection with or otherwise relating to the Business, including all

non-competition, non-solicitation, work-for-hire, confidentiality and similar

types of covenants and agreements with Seller's current and former employees.

 

              2.5.5 All business and marketing records, including accounting and

operating records, asset ledgers, inventory records, reports, budgets, personnel

and payroll records of employees of Seller to be employed by Purchaser, customer

lists, supplier lists, information and data respecting leased or owned

equipment, correspondence and mailing lists, advertising materials and

brochures, and other business records used directly or indirectly in or

otherwise relating primarily to the Business or the Assets, in whatever form

they exist.

 

              2.5.6 All governmental approvals, authorizations, certifications,

consents, variances, permissions, licenses, and permits to or from, or filings,

notices, or recordings to or with, federal, state, and/or local governmental

authorities as well as states and jurisdictions outside of the U.S. directly or

indirectly relating primarily to the Business, to the extent assignable.

 

              2.5.7 All claims Seller may have against any person relating to or

arising from the Assets or the Business, including rights to recoveries for

damages or defective goods and to refunds.

 

         2.6. Material Contracts. Other than the Premises Lease, Seller is not a

party to any contract under which Seller (a) paid $10,000 or more during the 12

month period ending July 31, 2004, (b) received $10,000 or more during the 12

month period ending July 31, 2004, or (c) would, absent this Agreement and the

Contemplated Transactions, reasonably expect to pay or receive $10,000 or more

for the 12 month period immediately following the Effective Time. Neither the

Seller nor the Shareholder is subject to any contract: (i) that contains

covenants limiting the freedom of Seller or the Shareholder to compete in any

line of business in any geographic area; (ii) that requires Seller to share any

profits, or requires any payments or other distributions based on profits,

revenues or cash flows; (iii) pursuant to which third parties have been provided

with products that can be returned to Seller in the event they are not sold and

which could involve products valued at $10,000 or more (invoice price) in the

aggregate; or (iv) that has had or, assuming that Purchaser complies with its

obligations thereunder, may in the future have a material adverse effect upon

the business, earnings, financial condition, or prospects of Purchaser.

 

 

 

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         2.7. Litigation. There are no claims, actions, suits, proceedings or

investigations pending or, to the knowledge of the Seller Parties, threatened

against or affecting the Assets or the operation of the Business before any

foreign, federal, state, local or other governmental authority or agency.

 

         2.8. Compliance with Laws. The operation of the Business and the Assets

conform to the requirements of all applicable laws, rules, orders, ordinances,

decrees and regulations of all governmental regulatory agencies, whether

national, state or local, having jurisdiction thereover, and no material claim

alleging nonconformity or noncompliance with respect to such matters has been

made or threatened against Seller and/or the Assets or, to the Seller Parties'

knowledge, may in the foreseeable future be made by any such agency.

 

         2.9. Employee Benefit Plans. Seller has no formal or informal health,

dental, vision, life, retirement, profit sharing, deferred compensation,

pension, stock options, sick leave or sick time employee benefit plans in

effect.

 

         2.10. Employee Matters.

 

              2.10.1 List of Personnel. Schedule 2.10.1 contains a true and

complete list of the names and current compensation levels of all active

employees involved in the Business. Since July 31, 2004, there has been no

increase in the compensation of the employees of Seller.

 

              2.10.2 Employee Relations. There is no labor strike, dispute,

slowdown, stoppage, or similar activity pending or, to the knowledge of the

Seller Parties, threatened against Seller pertaining to the Business or the

employees involved in the Business. There are no charges, investigations,

administrative proceedings, or formal complaints of discrimination (including

discrimination based upon sex, age, marital status, race, national origin,

sexual preference, handicap or veteran status) pending or, to the knowledge of

the Seller Parties, threatened before the Equal Employment Opportunity

Commission or any federal, state, or local agency or court against Seller or the

Shareholder pertaining to the Business or the employees of the Business, and, to

the knowledge of the Seller Parties, no basis for any such charge,

investigation, administrative proceeding, or complaint exists.

 

              2.10.3 No Liabilities or Obligations. Except as reflected on the

Financial Statements, Seller has no liabilities or obligations to any

beneficiaries, governmental authorities, or any other parties arising out of or

relating to any employee claims.

 

 

 

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              2.10.4 Worker's Compensation Insurance Coverage and Claims Seller

has in full force and effect worker's compensation coverage in each jurisdiction

in which Seller is required to maintain such coverage by applicable state law.

Seller has paid or accrued all workers' compensation premiums required to be

paid in each jurisdiction in which Seller is required to maintain such coverage

by applicable state law.

 

         2.11. Taxes. The Seller Parties have filed all required tax returns in

connection with the Assets and the operation of the Business. All tax returns

filed by Seller or the Shareholder in connection with the Assets and the

operation of the Business are true, correct, and complete. The Seller Parties

have paid, or made provision for the payment of, all taxes that have or may have

become due pursuant to tax returns that are or were required to be filed by

Seller or the Shareholder in connection with the Assets and the operation of the

Business, or pursuant to any asse